StratAgree™ – Strategic Expansion
Grow your customer base by expanding in the right areas.
At the core of every organization’s strategy should be acquisition of new customers. This growth can be achieved through expanding capacity–by increasing presence (buying or building branches and other new distribution points) or by increasing efficiency (generating more sales per channel). We can help you with both.
As you develop your expansion strategy, don’t underestimate the impact of attrition on your customer base. At the same time, don’t overestimate your ability to control it! We’ll help you see your customer attrition as the steady beating of a drum. While there isn’t much you can do to stop that drumbeat, you CAN drown it out with the footsteps of large numbers of new customers!
Several years ago, we worked with a large national bank whose executives had been reluctant to pursue expansion efforts preferring instead to focus on protecting existing customers. They took pride in the bank’s longer-than-average customer tenure interpreting it as a result of superior customer satisfaction. It was not fun explaining to them that their long average tenure was actually a symptom of their bank’s poor performance acquiring new customers. With a low number of new and short tenured customers in the portfolio, the weighted average tenure for the entire portfolio was skewed toward long-tenured customers. Don’t fall for this one—it’s a common error. No one ever “retained” their way to prosperity. As shown in the following table, skilled acquirers have shorter average tenure.
There are two very good reasons your bank should focus on expansion and customer acquisition:
1. Customer acquisition (unlike attrition) can be influenced almost immediately.
2. The changes you’ll make to increase acquisition will help reduce attrition.
We’ve helped banks double their acquisition rates and grow their customers organically. We’d love to work with you.